amount of selling half shares

Question

if you just state that what is first step, will be good too :)



On November 1, 2019, Mike opened an account and deposited $20,000. He invested this money in 1,000 shares in Crazy Growth mutual fund at $20/share. As of today, March 23, 2020, Mike’s only investment grew to $37.00/share! Despite the great returns, and even with the fund being a back-end loaded fund, Mike believes that holding all his money in this one risky mutual fund is not worth the sleepless nights. He has therefore decided to sell half of his holdings. Calculate the amount that he will receive from the sale by selling half today. Do not take taxes into consideration.

Note: Use the Declining Redemption Schedule below to determine the back-end load fee that Mike will have to pay (the amount of the fee is based on the value of the fund when it is redeemed (sold)). Mike’s broker also charges a 2% commission on the sale after the Deferred Sales Charge is applied.

Declining redemption schedule:

within 1st year 6%

2nd year 5%

3rd year 4%

Answer 1

So it is within the first year so he would pay:

37,000 * .5 *.06 = $ 1,110 + (18,500 -1,110) * .02 = 347.80

$ 1,110 + 347.80 = $ 1,457.80 = commissions

$ 18,500 - 1,457.80 = $ 17,042.20 = proceeds

$ 17,042.20 - 10,000 = $ 7,042.20 = profit